Net-Zero Challenge: The Supply Chain Opportunity: Insight Report January 2021

In collaboration with
Boston Consulting Group
Net-Zero Challenge:
The supply chain opportunity
INSIGHT REPORT
JANUARY 2021
Cover: Illustration by Janne Livonen
Images: Getty Images (pages 2–5, 8–37) and Unsplash (page 7)
Contents
Preface: Why we need a ‘next level’ of climate action 4
Executive summary 6
1 A game changer for global climate action 8
2 The ‘big eight’ 11
3 Encouraging economics 16
4 Overcoming barriers 22
5 Decarbonizing supply chains: a corporate guide 26
5.1 Create transparency 27
5.2 Optimize for CO2 29
5.3 Engage suppliers 30
5.4 Push ecosystems 33
5.5 Enable your organization 35
6 Time to move 36
Appendix: Details per supply chain 38
Methodology 40
Contributors 41
Acknowledgements 42
Endnotes 43
© 2021 World Economic Forum. All rights

reserved. No part of this publication may
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or by any means, including photocopying
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storage and retrieval system.
Net-Zero Challenge: The supply chain opportunity 3

January 2021 Net-Zero Challenge:
The supply chain opportunity
Preface: Why we
need a ‘next level’
of climate action
Five years after the adoption of the Paris In 2020, we saw a temporary drop in emissions
Agreement, COVID-19 has reshaped the world as a result of COVID-19, at around 5–10%
and brought us to a crossroads. The health, compared to 2019 – the largest since the Second
social and economic consequences of this global World War. But to get on a long-term path to
pandemic on top of the increasingly urgent limit warming to 1.5°C, we need a structural
climate crisis have taken us to an inflection point. transformation that achieves global emission
How we choose to respond to these crises will reductions of this scale every year, not through
determine the pathway to our net-zero future. To crisis, but through a well-managed transition
succeed, the twin challenges of COVID-19 and that protects livelihoods and builds a resilient,
Nigel Topping
climate change must be addressed together, healthy, prosperous zero-carbon economy.
United Nations Framework
Convention on Climate
with zero-carbon solutions ready to accelerate
Change (UNFCCC) High- our recovery to a healthier, more resilient future.
Level Champion
A chance to ‘green the recovery’
The COVID-induced economic crisis gives the world net-zero emissions no later than 2060.2 If the US
a generation-defining window to bend the emissions were to deliver on President Biden’s campaign
curve and “build back better”, creating decent zero- promises, almost 75% of global GDP could have
carbon jobs, driving innovation and growth, and net-zero targets by early 2021.3 Commitments by
strengthening resilience to systemic shocks. Failure non-state actors are up as well. The number of
to do so will result in stranded assets, dislocation net-zero pledges by subnational and corporate
Gonzalo Munoz and widening inequalities. Now is the time for actors has roughly doubled in less than a year,4 with
United Nations Framework governments to capitalize on the unique opportunity more than 2,500 cities, states, regions, companies
Convention on Climate for stimulus packages to tackle COVID-19 and investors now committed to credible targets to
Change (UNFCCC) High- recovery and climate change simultaneously. reach net-zero by 2050 at the latest.5 The trend of
Level Champion investors supporting decarbonization has also held
The run-up to COP26, the 2021 United Nations up, as the volume of green and sustainable bond
Climate Change Conference, gives reason for issuance grew by another ~10% in 2020.6
renewed optimism. The UK and EU are both
committed to achieving net-zero by 2050,1 South Commitment to climate action is growing fast in all
Korea and Japan have recently committed to sectors of society. Now is the time to accelerate
setting net-zero by 2050 targets, and China – the action and implementation.
world’s largest emitter – has committed to achieving
4 Net-Zero Challenge: The supply chain opportunity

Decarbonizing supply chains: the next level of corporate action
Last year’s report on the Net-Zero Challenge7 chains to speed and support rapid decarbonization
highlighted how much more individual actors throughout the economy, and it can put pressure on
– governments, corporations, investors and suppliers in regions where governments do not (yet)
individuals – could do to bring down emissions, and do so. As 90% of the world’s businesses are small
many have heeded that call. This edition now puts a and medium enterprises (SMEs), working with supply
spotlight on a critical factor in achieving the targets chains and connecting them with the appropriate
they have set – decarbonizing supply chains. tools – such as the recently launched SME Climate
Hub8 – is a vital part of the implementation of
Supply-chain decarbonization will be a “game ambitious corporate climate action.
changer” for the impact of corporate climate action.
Addressing Scope 3 emissions is fundamental We call on all to act and join the Race to Zero, and
for companies to realize credible climate change hope that this report helps to provide guidance on
commitments. It enables companies in customer- how to move quickly on delivering on those goals.
facing sectors to use their influence in supply
Climate change is the single greatest threat there has ever been to
our planet and livelihoods. The World Economic Forum is dedicated
to advancing action to decarbonize our economy and ensure a
stable transition to a net-zero world.
At our Annual Meeting in January 2020, I invited all members to set
a target to achieve net-zero greenhouse gas emissions by 2050 or
sooner. This is our Net-Zero Challenge, spearheaded by our flagship
climate action community, the Alliance of CEO Climate Leaders.
This report, co-authored with Boston Consulting Group, is the
second in our series for the Net-Zero Challenge. It showcases the
opportunity that all companies have for huge climate impact through
action to decarbonize global supply chains.
Klaus Schwab, Founder and Executive Chairman, World Economic Forum

Executive summary
Addressing supply-chain emissions enables efficiency and renewable power – with only marginal
many customer-facing companies to impact impact on product costs. Even with zero supply-
a volume of emissions several times higher chain emissions, end-consumer costs would go up
than they could if they were to focus on by 1–4% at the most in the medium term.
decarbonizing their own direct operations and
power consumption alone – and achieving a But: decarbonizing supply chains is hard. Even
net-zero supply chain is possible with very leading companies struggle to get the data they
limited additional costs. This report shows how. need and to set clear targets and standards to
which their suppliers must adhere. Engaging an
Among the major findings: often-fragmented supplier landscape is challenging
– especially when emissions are “buried” deep in
Many companies can multiply their climate the supply chain, or when addressing them might
impact by decarbonizing supply chains. For require collective action at the industry level.
companies in most customer-facing sectors, end-
to-end emissions are much higher than the direct Our step-by-step guide shows nine major
emissions in their own operations (so-called Scope initiatives every company can undertake.
1 and 2 emissions). By engaging suppliers to create Through interviews with several dozen global
a net-zero supply chain, companies can boost their companies that lead the way in reducing supply-
climate impact, enable emission reduction in hard- chain emissions, we have identified nine key
to-abate sectors, and accelerate climate action in actions: (1) build a comprehensive emissions
countries where it would otherwise not be high on baseline, gradually filled with actual supplier data;
the agenda. (2) set ambitious and holistic reduction targets,
reducing emissions by (3) revisiting product design
Eight supply chains account for more than choices and (4) reconsidering (geographic) sourcing
50% of global emissions. Food, construction, strategy; (5) set ambitious procurement standards
fashion, fast-moving consumer goods, electronics, and (6) work jointly with suppliers to co-fund
automotive, professional services and freight abatement levers; (7) work together with peers to
account for more than half of all global greenhouse align sector targets that maximize impact and level
gas emissions. A significant share is indirectly the playing field; (8) use scale by driving up demand
controlled by only a few companies. to lower the cost of green solutions; and – finally
– (9) develop internal governance mechanisms
Net-zero supply chains would hardly increase that introduce emissions as a steering mechanism
end-consumer costs. Around 40% of all emissions and align the incentives of decision-makers with
in these supply chains could be abated with emission targets.
readily available and affordable levers (<€10 [$12]
per tonne of CO2 equivalent),9 such as circularity, It is time to move.

FIGURE 1 Focus of this report
Following the Greenhouse Gas Protocol Corporate Accounting emissions in the production of steel used in the car
and Reporting Standard, emissions are typically split into that an automotive original equipment manufacturer
three scopes:10 (OEM) produces. Scope 3 downstream emissions cover
transport of products, usage of sold products and product
– Scope 1 covers the emissions from operations under a disposal. For the same automotive OEM, this refers to
facility’s control, including onsite fuel combustion. the emissions from its cars being driven by customers.
– Scope 2 covers the emissions from usage of electricity, This report focuses on the supply-chain emissions that
steam, heat and/or cooling purchased from third parties. happen upstream from a company, often in the course of
– Scope 3 covers upstream and downstream value- creating products or services that the company buys as
chain emissions. For the purpose of this report, we well as on the Scope 1 and 2 emissions of the respective
refer to Scope 3 upstream emissions as supply-chain end consumer-facing companies – in the example
emissions, covering procured products, transport of above, this would cover the automotive OEM itself. The
suppliers and business travel. For example, this covers report does not address downstream emissions.
Scope 3 Upstream Scope 1 Scope 3 Downstream
Emissions from operations under

Emissions from procured products, facility's control, including onsite Emissions from transport of products,
transport of supplies, business travel fuel combustion usage of sold products, product disposal
Scope 2
Emissions from usage of electricity,

steam, heat and/or cooling
Source: GHG Protocol, BCG purchased from third parties

1 A game changer for
global climate action
Tackling supply-chain emissions offers
companies the opportunity to multiply
their climate impact several times over.
We can solve the climate crisis only if

we put our money where our mouth is.
Martin Daum, Member of the Board
of Management, Daimler

Taking an end-to-end perspective has come Nestlé, only about 5% of its emission footprint is
to dominate the debate, and more and more generated during direct operations (Scopes 1 and
companies now disclose – and address – 2). Emissions generated by its suppliers are 10
emissions across their whole supply chain. times higher.11
Decarbonizing supply chains could be a game The disparity is not limited to Nestlé. In many
changer for global climate action with a potentially consumer-facing industries with long upstream
huge impact. Especially in customer-facing sectors value chains, Scope 1 (own operations) and Scope
where a company’s direct emission footprint is 2 (consumed power etc.) emissions, even when
relatively low, companies can address significantly combined, fall far short of the emissions generated
larger emission volumes through their supply in the supply chain (see Figure 2).
chains. For a consumer brand company such as
FIGURE 2 Emissions in supply chains often exceed operations
Emission split in Scopes 1, 2 and 3 upstream for selected industries (CO2e, 2019)
Raw materials End products

6% 29% 30% 33% 61% 61% 77% 81% 82% 83% 85% 90%
Supply chain
(Scope 3 upstream)
Consumed
power etc.
(Scope 2)
Operations
(Scope 1)
Cement Steel Mining Agriculture Textiles Chemicals Electronics Construct. Automotive Food Fashion FMCG
Note: Top companies selected based on number of reported Scope 3 upstream categories and industry fit;
FMCG = fast-moving consumer goods
Source: CDP, BCG
Because many supply chains are geographically An analysis of the major global trade flows shows
dispersed, Scope 3 actions can have a favourable that Western economies import significant volumes
climate impact in countries where regulatory of emissions, especially from Asia (see Figure 3).
pressure is low. This is because of the degree to This means that supply-chain measures put in
which business remains an international activity. place by relatively few end-consumer companies in
Between 2015 and 2019 alone, global trade Europe and the US can affect the emissions profile
increased by 16%,12 despite the neo-protectionist of growing Asian economies. Developments such
tendencies of some global actors. And, as trade in as COVID-induced nearshoring efforts, the US/
raw materials and finished products has become China trade war and the possible introduction of
increasingly global, so has the reach of companies. an EU carbon border tax could obviously change
Many engage with a complex international supplier this regional spread in the future, but are unlikely to
base, giving them the opportunity to trigger change the dynamic.13
emission reductions in countries with otherwise
high carbon intensity and limited policy support.
Reducing the company’s carbon footprint alone is not enough –

enabling supply-chain emission reduction is a must-do.
Anirban Ghosh, Chief Sustainability Officer, Mahindra Group
We see the progression at CDP. At the beginning we mainly

worked with sustainability functions. But over time this
increasingly shifted out to procurement teams as well,
thinking about the full supply chain.
Dexter Galvin, Global Director Corporations and Supply
Chains, CDP

FIGURE 3 Supply-chain action can address “imported emissions”
Top 20 global CO2 export flows (Mt CO2, 2015)
21
23 53 Russia
42 24
37
EU
37 China 110 Japan
151
USA 32
and Korea
226 50
23
19
46
28
74 25
56 28
44 19
ASEAN
South and
Note: Excluding mining Central America
activities and services
Source: OECD Trade in
Embodied CO2 Database
(TECO2), BCG
Finally, supply-chain measures can accelerate fund their relatively expensive decarbonization
action in so-called hard-to-abate sectors. These efforts. By contrast, consumer-facing companies
sectors – including cement, steel, chemicals and are more profitable and can pass along
heavy transport – generate low profits relative to decarbonization costs in increments felt much less
the emissions they create and hence struggle to by end customers (see Figure 4).
FIGURE 4 Consumer-facing industries often have greater financial means
Net income per ton of emissions (€/t CO2e Scopes 1-3 upstream, 2019) Raw materials End products
460 440 420

360
200
180
130 40 35 135
90
10
Cement Textiles Mining Chemicals Steel Agriculture

Construction Fashion Electronics FMCG Auto Food
Note: Top companies selected based on number of reported Scope 3 upstream

categories and industry fit; FMCG = fast-moving consumer goods
Source: CDP, BCG

2 The ‘big eight’
Across the eight major value chains that
drive global emissions, solutions are
already available to get us to net-zero.

Eight supply chains – from raw materials to end- (FMCG), electronics, automotive production,
product manufacturing – account for more than professional services, and freight (see Figure 5).14 In
half of all global greenhouse gas emissions. Food automotive production in particular, the challenge
alone accounts for around a quarter – the most of will only grow over time. As car fleets electrify
any supply chain in the world. Construction has the to address the sector’s even larger downstream
next-biggest footprint, at 10% of global emissions, emissions, energy-intensive battery manufacturing
followed by fashion, fast-moving consumer goods could escalate the carbon footprint upstream.15
FIGURE 5 Eight supply chains are responsible for more than 50% of global emissions
Food Agriculture Freight Manufacturing
Construction Cement, steel, plastics, … Freight Manufacturing

~25%
Global Fashion Synthetics, textiles, garments, … Freight Manufacturing
emissions
Other FMCG Chemicals, plastics, … Freight Manufacturing
supply
chains
Electronics Mined metals, … Freight Manufacturing
<50%
<10% Auto Steel, aluminium, batteries, … Freight Manufacturing
<5% Prof. services Offices

Business travel
<5%
<5%<2% Other freight Agriculture Shipping Rail Aviation
Note: Only selected value chain steps are shown here; value chain steps not shown
at scale; FMCG = fast-moving consumer goods
Source: BCG

Raw material inputs from land use and heavy intermediary industries (fashion and electronics, in
industries (including agriculture in the food supply particular) are located in areas with a very high-
chain, cement in construction, plastics in FMCG, emission energy mix, tilted more towards lignite,
and metals in automotive production) drive the hard coal and oil than towards renewables or
majority of emissions. Operational manufacturing natural gas. The third factor applies primarily to
and freight are smaller in comparison (see Figure agriculture and is an intrinsic part of the output
6). This is driven by several factors. The first is product. Livestock grazing and other forms of
the sheer energy intensity of widely used input cultivation are responsible for significant emissions
materials such as steel, other metals, cement and of methane and nitrous oxide, both powerful
plastics, all of which typically require substantial greenhouse gases.
amounts of high-temperature heat. Secondly, many
FIGURE 6 Land use and heavy industries drive most emissions
Split of emission sources by value chain (%) Land use Heavy industry Transport Other
Manufacturing
Aviation
Batt.
Freight
Rail
Other materials Textiles &
Offices
garment Shipping
Aluminium
Aluminium
Agriculture
Steel Cotton
Mining
Chem/plastics Heavy
Steel
road
Travel
Synthetics
Deforestation Cement
Chem/plastics
Food Construction Fashion FMCG Freight

Electronics Prof. services
Note: FMCG = fast-moving consumer goods Source: BCG Auto

How can these supply chains move to net- – New processes: introducing and/or switching
zero? Decarbonizing each will require a different to new (production) processes. An example
combination of eight major abatement levers – listed is switching from blast furnaces to electric arc
here in ascending order of average cost (see Figure 7): furnaces using direct reduced iron for steel
production. Another example is moving to green
– Circularity/recycling: increasing the share of hydrogen-based fertilizer production.
recycled materials.
– Nature-based solutions: increasing the use of
– Material and process efficiency: lowering the sustainable agricultural practices (such as more
amount of waste and/or improving efficiency in precise fertilization, reducing tilling, planting cover
the production process to reduce power and/ crops and using nitrification inhibitors), moving to
or heat consumption. This can be done by deforestation-free agriculture and implementing
using the newest available process and heat carbon-removal levers for emissions that cannot
technologies (such as motors, drives, pumps or be avoided otherwise (such as reforestation,
ovens), more efficient process steering, by using restoration of mangroves and peatland, soil
waste heat from other processes, or reducing sequestration and biochar production).
material waste in production.
– Fuel switch: converting any remaining
– Renewable power: switching to renewable combustion processes to greener solutions
energy for power. This is achievable through (such as battery-electric or hydrogen-
self-generation of wind and solar power powered trucks) or green fuels (such as
or bioenergy, or through renewable power biofuels and e-kerosene in aviation or green
procurement with (virtual) power-purchase ammonia in shipping).
agreements (PPAs) or certificates.
– Carbon capture, utilization and storage
– Renewable heat: replacing coal, gas and oil in (CCUS): capture unavoidable carbon emissions
industrial heat and steam generation. Alternative from processes and/or combustion, for
sources include biomass, large-scale heat example, in cement carbonization.
pumps, power-to-heat and solar thermal for
low-temperature heat, and biogas or hydrogen
for high-temperature heat applications.
FIGURE 7 Eight levers to abate supply-chain emissions
Average costs Maturity
Less virgin
Circularity/recycling < €10/t CO2e
material production
Less material usage and

Material and process efficiency < €10/t CO2e
energy consumption
Power from renewable sources

Renewable power < €10/t CO2e
(e.g. solar, wind)
Heat from renewable sources

Renewable heat €10–100/t CO2e
(e.g. biomass, power)
New production processes

New processes €10–100/t CO2e
(e.g. H2-DRI for steel)
Nature-based solutions Avoiding deforestation, €10–100/t CO2e

more sustainable agriculture
Transport: switch to green

Fuel switch > €100/t CO2e
fuels, batteries, hydrogen
Capture carbon and recycle

Carbon capture > €100/t CO2e
or store it underground
Ready in 5–10 years

Source: BCG Ready today

Many of these levers are readily available today – narrowing given the significant cost improvements
with very affordable or even positive economics. in recent years. Only the full decarbonization of
Increasing material and process efficiency often heavy industry and freight through low-carbon heat,
results in cost savings with comparably short new processes, carbon capture and green fuels
payback times, even in jurisdictions that do not still implies high costs and the implementation of
levy a price on carbon. Renewable power usually technologies not yet available at scale (see Figure 8
comes with a small surcharge, but the difference is and Appendix for more details).16
FIGURE 8 The impact of levers varies strongly across supply chains
Share of abatement lever potential by value chain (%)
Carbon capture
Renewable
Nature-based solutions New processes heat
Fuel
switch
Renewable
power
Material and process efficiency

Circularity
Food Construction Fashion FMCG Freight

Electronics Prof. services
Note: FMCG = fast-moving consumer goods Auto
Source: BCG

3 Encouraging
economics
The costs of deep decarbonization across supply
chains are surprisingly low and result in an
increase of only 1-4% on end-consumer prices.

Along with insufficient regulation, costs are often be abated with readily available and affordable
cited as a major reason why companies do levers such as circularity, efficiency and renewable
not bring down their emissions. This argument power. And even net-zero supply-chain emissions
is increasingly flawed. Around two-fifths of all are achievable with very limited impact on product
emissions in the analysed supply chains could costs in the medium term.
A significant share of emissions can

be eliminated at little to no cost
Many of the abatement technologies described improvement levers have especially fast payback
above are not only readily available, but already periods, often within three to five years.
highly affordable (see the Methodology section for
more details). Across the analysed supply chains, It should be noted that the costs for renewable
~40% of all emissions could be eliminated with generation refer to the corporate perspective.
measures that either yield savings (for example, Once entire supply chains and systems move
by implementing efficiency measures) or come at to 100% renewable power, there would likely
abatement costs below €10 per tonne of CO2e be additional costs from grid infrastructure
(for example, switching to renewable power) – and renewable backup capacity investments
see Figure 9. Material and process efficiency required to support the system.
FIGURE 9 ~40% of emissions can be abated at very low costs
Share of abatement lever cost by value chain (%)
20
40 35 35 40%
45 < €10/t CO2e
55 55 15
70
40
55
45
40%
40 €10–100/t CO2e
65
30 30
25
15
20 20 20%
15 15 10 > €100/t CO2e
5
Fashion Auto Electronics Prof. Services FMCG Construction Food Freight
Note: FMCG = fast-moving consumer goods

Source: BCG
At Dalmia Cement, we follow the business philosophy of “clean

and green is profitable and sustainable”. One of the objectives of
our carbon-negative roadmap is to prove that the cost of inaction
will be much higher than the cost of deep decarbonization.
Mahendra Singhi, Managing Director and Chief Executive Officer,
Dalmia Cement
There are many things you can do with paybacks of only ~3

years – we are now looking at what else is possible with a longer
payback horizon, and that offers even more potential.
Yashovardhan Lohia, Chief Sustainability Officer, Indorama Ventures

Another ~40% of emissions would cost between with high flue gas concentration. While it is likely
€10 and €100 per tonne of CO2e to abate. Today, that costs in these applications will decline with
this includes most low-temperature renewable increasing adoption, it is unlikely they will ever be
heat technologies (such as biomass, heat pumps, economic. In ambitious regions such as the EU,
power-to-heat and biogas in some countries). measures in this cost bracket might be covered
By the second half of this decade, the same by medium-term carbon price levels.17 In other
abatement cost will apply to battery- or hydrogen- regions, the measures would require willingness
based road logistics, as well as carbon capture, from downstream players to bear some of the cost.
utilization and storage (CCUS) in a few processes
Full decarbonization requires very costly measures
In most sectors, full decarbonization would require and shipping. Costs may come down once these
implementing even costlier measures. Especially technologies achieve scale (as a comparison, the
in hard-to-abate industry and transport sectors, cost of solar photovoltaics has declined by around
moving to net-zero emissions will require the use 80% in the past 10 years).18 But it is prudent to
of technologies that are not yet mature and are assume they will remain comparatively expensive.
therefore very expensive. This includes the use
of green hydrogen for the production of zero- For more details of the abatement levers and
carbon steel and green fertilizer, renewable high- associated costs across each of the major supply
temperature heat in process industries such as chains, see Figure 10 and the Appendix.
chemicals and cement, and green fuels for aviation
At first glance, it’s often hard to understand which

decarbonization levers are economically viable – both new
market mechanisms and technologies need to be developed
across many industries and geographies to support a low-
carbon economy.
Jörg Unger, Senior Vice-President Corporate Technology, BASF

FIGURE 10 Abatement cost curves for each sector
Food supply chain
400 Abatement costs (€/t CO2e, 2030)

Address deforestation across different countries
Renewable power in food processing
200
Reduce food waste
0
100%
-200 Abatement potential (t CO2e, 2030)
Construction supply chain
400 Abatement costs (€/t CO2e, 2030) Renewable heat for cement production
Mechanical recycling of plastic materials

200 Renewable power for aluminium
0
100%
Fashion supply chain
Renewable power for synthetics production

200 Textile recycling
Reduce overproduction
0
100%
Fast-moving consumer goods supply chain

Switch to biogas for high-temp. heat
200 Chemical recycling

Process efficiency in virgin plastics production
0
100%
Circularity/recycling Renewable power New processes Fuel switch

Material and Nature-based
Renewable heat CCUS
process efficiency solutions
Source: BCG

FIGURE 10 Continued
Electronics supply chain

Hydrogen in mining ops
Renewable power for assembly lines

200
Energy efficiency for assembly lines
0
100%
Automotive supply chain

Biogas in plastics production
Switch to hydrogen-based EAF steel
200
Renewables in aluminium production
0
100%
Professional services supply chain

Renewable heat for offices
Renewable power for offices
200
Switch to virtual meetings
0
100%
Freight supply chain
400 Abatement costs (€/t CO2e, 2030) Switch to synthetic aviation fuel
Switch to fuel-cell trucks

200
Optimize truck routing
0
100%
Circularity/recycling Renewable power New processes Fuel switch

Material and Nature-based
Renewable heat CCUS
process efficiency solutions
Source: BCG

Costs for end consumers are very limited
Companies willing to invest in these costly How can this be? An example helps illustrate the
measures are in reality risking little in terms of maths. Consider the steel used in a medium-sized
impact on end-consumer prices. Raw materials (€30k) family car – besides aluminium, the biggest
represent only a small share of final product current contributor to its upstream emissions.
prices – about 20% of a car and no more than Bringing down emissions in steel production is
10–20% of a pair of trainers. Even with ambitious expensive and moving to zero-carbon steel would
upstream reduction targets, the impact on end increase production costs significantly. But as steel
price is relatively low – no more than 1–4% in the accounts for less than €1k equivalent of the car’s
medium term if zero supply-chain emissions is the final sales price, the mark-up this triggers would
goal (see Figure 11). Decarbonization costs may still account for less than 1% of the total cost.
appear high for some producing industries, but
they are relatively affordable for end consumers.
FIGURE 11 Zero upstream emissions possible at low consumer costs in the medium term
Automotive Fashion Food Construction Electronics
€500 €1 €1 €5k €3
<2% avg. cost <2% avg. cost <4% avg. cost <3% avg. cost <1% avg. cost
increase on a increase on a increase on a increase on a increase on a
€30k car €40 pair of jeans €20 shopping basket €150k home €400 personal device
Source: BCG
Companies have an upside
Given these low costs, supply-chain decarbonization sustainable products sell well even with premiums
actually offers companies an upside. Especially in of around 40% – far from what would be required
Western countries, survey-based studies indicate to achieve zero-emission supply chains.What’s
that more than 50% of consumers are willing to more, this segment is growing fast. Demand for
pay more for sustainable products.19 Point-of-sale sustainably marketed products grew around seven
studies of different consumer goods products times faster than the demand for their conventionally
indicate that in some customer segments, marketed counterparts over the past five years.20
We need to educate consumers that buying a green product

is often an option they have, that the extra price is often
comparatively small, but the extra impact they have with this
responsible choice is significant.
Stefan Doboczky, Chief Executive Officer, Lenzing
We have witnessed a growing demand from customers who are

willing to spend more on products with less carbon intensity to
reach their own low-carbon goals.
Hak-Cheol Shin, Chief Executive Officer, LG Chem

4 Overcoming barriers
Taking action is hard – companies lack
transparency and broader industry and
government support, but these hurdles
can be overcome.

Why is supply-chain decarbonization not
already being done?
A variety of factors have prevented companies More importantly, implementing decarbonization

from trying to reduce emissions in their supply levers is really very challenging. At many
chains (see Figure 12). One common problem is companies, emissions are distributed widely
that many companies still have limited transparency across countries and tier n suppliers (including
about these emissions in the first place – and the suppliers and suppliers of suppliers). Such
mechanisms for establishing greater transparency complexity makes it challenging to get to net-
at the supplier level are still immature. This zero emissions – especially given the scant
lack of transparency means the economics of attention paid, so far, to Scope 3 emissions
decarbonization are obscured, leading to the from industry ecosystems and regulators.
perception that optimizing for sustainability may
interfere with the goals of increasing performance
or lowering costs.
FIGURE 12 Addressing upstream emissions is hard, with several barriers
Knowledge Lack of
gap among clarity on
suppliers Scope 3
boundaries
Hard to set
targets where
Hard to Scope 3 (SBTi) pathways
monitor estimates are not agreed
fragmented rely on
suppliers
Lack of
averages
high-quality
Low trust in data sharing Performance
Concern over
supplier high-
with suppliers and cost
customers'
willingness
certifications
concerns vs. to pay
Low margins low-carbon
and high
Hard to
change design
costs to
abate in-series
Lack of production Procurement
incentives
government
not aligned
action/ Conflicting to climate
Too high investment procurement
Lack of
costs for priorities
procurement
individual team under-
value chains standing
Lack of transparency Challenging to execute Limited support
Source: Interviews with 40 climate-leading CEOs and their teams and experts in Q3+4 2020, BCG

Transparency is still insufficient
Few companies disclose their Scope 3 emissions. stage. As a result, data interfaces with suppliers are
Those that do often need to develop estimates still generally manual and unreliable.
based on information such as weight, quantity and
spend for procured materials, as well as emission Finally, there are many ways for peers to look at
factor databases based on country averages. For their Scope 3 emissions. Some companies consider
companies with sometimes tens of thousands “cradle-to-gate”, that is, from the very beginning
of individual products and significant turnover in of the supply chain until just after production, while
their supplier bases, the challenges are daunting. others report “cradle-to-point-of-sale”. Still others
Some even struggle to understand who their tier are “cradle-to-grave” in their analysis, meaning they
n suppliers are in the first place, especially when include emissions in customer use and end-of-life
looking beyond their tier 1 suppliers. emissions from landfill or recycling.21
Even knowing who the suppliers are does not The lack of transparency upstream feeds into a lack
guarantee reliable data. Despite the sophisticated of trustworthy certifications or standards by which
digital procurement and enterprise resource to assess and communicate sustainability efforts to
planning tools used in the market, a fully functional customers. This makes peer comparisons harder
and widely accepted infrastructure for sharing and leaves consumers confused instead of helping
environmental data is still only at the development them make (more) sustainable product choices.
We really need a good answer on what should be considered

within our Scope 3 definition – we need to focus on what
business can realistically influence.
María Mendiluce, Chief Executive Officer, We Mean Business
Without labelling standards, we will have an increase in

misleading sustainability marketing, which will create mistrust
and cheapen genuine efforts to do right by the planet.
Rob Cameron, Head of Global Public Affairs and Sustainability, Nestlé
Decarbonizing supply chains is challenging
For many companies, supply-chain emissions are difficult. Procurement teams may be unaware
distributed across hundreds or even thousands of of low-carbon alternatives when they make
individual tier n suppliers in many different countries purchasing decisions. It is difficult to manage
around the globe. They are also not static, as parts procurement criteria without a clear hierarchy or
of the supplier base can change year-on-year. internal alignment, and the incentive structures in
This makes addressing supply-chain emissions an procurement teams are not geared to sustainability
extremely difficult task. today. In some cases, bringing down emissions
requires intense, long-term engagements
There are also organizational problems that make with individual suppliers. Not all procurement
monitoring and tracking upstream emissions organizations are set up for this.
One of our big challenges is how to get a view on the hundreds

of thousands of farmers in our supply chains, but we see that as
an opportunity for more and more direct farmer engagement.
Greg Downing, Sustainability Director, Climate, Cargill
You have to remember that in fashion, there can be thousands

of small family-run garment businesses, spread across the value
chains, that are supplying brands.
Laila Petrie, Chief Executive Officer of 2050, and Joint Chair, UNFCCC
Fashion Industry Charter for Climate Action

Even where companies do manage to engage significant investment and technology risk. In
most of their important suppliers, triggering action agriculture, farmers may need to invest upfront
can be challenging. Suppliers may not be aware and “rest” the land, with short-term hits to yields,
of the available levers. Even if they are, they may before they can manage their processes more
be anxious about potential costs and the scale of sustainably. Without reassurance from the market
investment required. For margin-challenged heavy that customers will pay more for their produce, or
industry players, investing in deep decarbonization that they will be paid for the carbon they sequester,
without long-term offtake guarantees can be a this can be daunting and lead to inaction.
Companies often struggle with a clear mandate for the

sustainability function to engage with procurement on supply-
chain emissions – they are most often still focused on their direct
operational footprint rather than taking a supply chain lens.
Cynthia Cummis, Director, Private Sector Climate Mitigation, World
Resources Institute, and Steering Committee Member, Science Based
Targets initiative
It takes five years to see an impact with a change in the way land
is managed. You cannot expect a farmer to take that risk alone,
without knowing that she or he will be compensated for it.
Alexandra Brand, Chief Sustainability Officer, Syngenta
Support from industry ecosystems and regulators

is limited so far
Where the costs of decarbonization are high and would benefit its rivals – and this risk has kept some
enabling infrastructure is needed (e.g. for low- Scope 3 initiatives from launching. Ecosystem
carbon transportation), actors within a single initiatives are trying to overcome this inertia in many
supply-chain relationship may not be able to fund sectors, but few have had a significant impact on
the full transition. If one automotive player supports emissions to date.
a steelmaker to decarbonize its processes, all
other car makers would benefit from access to that Companies also often cite a lack of government
greener steel without funding the required process policy support or sector-level targets from industry
change. It is understandable that a company would bodies as inhibitors. Both of these can make the
not want to bear the full cost of an investment that hurdle for first movers unnecessarily steep.
We need to have the infrastructure set up that enables low-

carbon transport – we must work with our ecosystem to jointly
make change in greener freight happen.
Henrik Henriksson, President and Chief Executive Officer, Scania

5 Decarbonizing
supply chains: a
corporate guide
Climate leaders can take nine steps
to tackle supply-chain emissions.

Fortunately, many of the obstacles can companies to tackle emissions in their
be overcome. Nine initiatives can enable supply chains (see Figure 13).
FIGURE 13 Nine supply-chain initiatives chief executive officers should push for
Create transparency Optimize for CO2 Engage suppliers Push ecosystems
Build value chain emissions Integrate emissions metrics Engage in sector initiatives
Redesign products
1 baseline and exchange data 3 5 in procurement standards 7 for best practices,
for sustainability
with suppliers and track performance certification, advocacy…
Set ambitious reduction Design value chain/ Scale-up “buying groups”

Work with suppliers to
2 target on Scopes 1–3 and 4 sourcing strategy 6 8 to amplify demand-side
address their emissions
publicly report progress for sustainability commitments
Introduce a low-carbon governance to align

Enable your organization 9
internal incentives and empower your organization
Source: Interviews with 40 climate-leading CEOs

and their teams and experts in Q3+4 2020, BCG
5.1 Create transparency
Action 1: Build a value-chain emissions baseline and exchange data

with suppliers
Establishing a comprehensive emissions baseline is developing supplier-specific assumptions (at least

crucial. Supply-chain emissions can be calculated for their “emission hotspots”). These assumptions
with different levels of granularity. More granular data typically cover adjustments for differences in energy
should be used for tier 1 suppliers, and for products, mix across facilities, different material emissions by
components or commodities that contribute the process steps and/or different volumes of waste
most emissions. production per site. A dataset this specific often
needs to be provided by the suppliers themselves.
As an initial step, companies can match their Carlsberg, for example, combines direct supplier
procurement spending to global emission factors data with region-specific estimates to create a
databases. There are several software solutions detailed view of its Scope 3 emissions.22
and databases available that offer a quick match of
procurement data to environmentally extended input- An effective technique is to exchange data with
output factors, building a high-level view on the overall suppliers directly, building a specific view of the top
supply-chain footprint. In a second step, accuracy suppliers that account for the majority of spend.
can be improved through using a volume-based Dow, Siemens, Arçelik and others are currently
approach or by using a regional view – segmenting setting up a life-cycle emission data-sharing pilot
suppliers by location, and making specific estimates for a washing machine along the entire supply chain
based on the regions in which suppliers operate. (“cradle-to-gate”) under the umbrella of the World
Economic Forum. Daimler is piloting a blockchain
For the most accurate level of transparency, climate system to capture material information throughout
leaders can tailor their estimates through the use the supply chain, including the share of recycled
of full life-cycle analyses of key products and by materials, emissions and other information.23

For the data to be meaningful it needs to be on project-level –
we need to be able to make decisions based on it.
José Luis Blasco, Global Sustainability Director, Acciona
It is not enough to use generic sources of data – it is not detailed

enough to act upon. We developed a more granular baseline and
understood SKU [stock-keeping units]-level information about
energy mix, share of recycled content etc. This allows us to have
discussions with management teams across the Group to identify
specific local reduction initiatives.
Simon Boas Hoffmeyer, Senior Director Sustainability, Carlsberg Group
Action 2: Set ambitious reduction target on Scopes 1–3 and publicly

report progress
Once they have transparency on their supply- Several financial institutions have done this by
chain emissions, companies should set a public joining the SBTi expert advisory group, the Net-
1.5°C-aligned target and/or net-zero target across Zero Asset Owners Alliance and/or the 2° Investing
all emissions scopes and understand what this Initiative (2DII).24
means for their business. In most cases, targets
are achievable at very little cost. Where no widely Companies should also actively cascade their
accepted target pathways exist (e.g. where the targets through their supply chains. For example,
Science Based Targets Initiative [SBTi] has not yet sports goods retailer Decathlon is aiming to get
confirmed a sector pathway), companies should 90% of its suppliers (by spend) to set science-
aim to develop pathways with others in their sector. based targets by 2024.25
BOX 1 Emissions reporting and science-based targets at Carlsberg
Carlsberg has a target to reduce its “beer-in-hand” from suppliers’ individual primary data for the
footprint by 30% by 2030. (“Beer-in-hand” includes materials they supply to Carlsberg. Where this is
refrigeration emissions in bars and shops, as well not available, Carlsberg looks to develop estimates
as emissions that happen in its supply chain or in based on material and location-specific factors.26
distribution.) Approximately ~85% of emissions are
out of Carlsberg’s direct control, so the company Carlsberg adheres strictly to guidance for
works with suppliers to encourage a commitment developing a standardized and transparent footprint
to science-based targets. As of February 2020, from three levels: (1) The GHG Protocol for Scopes
110 suppliers in Carlsberg’s supply chain had 1, 2 and 3; (2) the Beverage Industry Environmental
already made a commitment. Roundtable sector-specific guidance; and (3) the
European Commission’s Product Environmental
To establish transparency, Carlsberg has teamed Footprint Category Rules on beer-specific
with The Carbon Trust to develop an advanced guidance.27 Carlsberg has co-developed and
supply-chain emission calculation model. The invested in improving the methodologies for
model uses supplier-specific emissions data (which more than half a decade to create consensus,
is available for >50% of emissions). This comes consistency and transparency for the sector.

5.2 Optimize for CO2
Action 3: Redesign products for sustainability
Design choices can help bring down supply-chain by using greener materials, cutting waste, reducing
emissions. In many industries, companies need to product variance, increasing recyclability, improving
differentiate between products in series production repairability and switching manufacturing processes
and those in development. For in-series products to lower-carbon ones. For example, Tesla has
– where fundamental changes are hard to make – continually improved its product specifications to
leaders try to lower the energy footprint in suppliers’ reduce total cable length with each subsequent
operations and increase the share of recycled model, requiring less input material, reducing weight
input materials. For example, Dell has continued to and extending battery lifespan.29 Similarly, the World
increase the share of recycled end-of-life electronics Economic Forum’s Circular Cars Initiative is set up to
and ocean-bound plastics in its products, while minimize waste and maximize recyclability.30 Some
improving the repairability and recyclability of companies take even more radical approaches. For
products to create a closed-loop system.28 example, the German meat processor Rügenwalder
Mühle has driven a major (and successful) portfolio
For new products, the options are wider. Companies shift towards vegetarian alternatives for processed
can fundamentally design products for sustainability meat products in recent years.31
BOX 2 Companies are rethinking product design choices
Examples from industry suggest two areas alternatives. For a dishwasher liquid, the
of sustainable product design that companies company found that its new formulations
are pursuing: lead to better cleaning performance and less
environmental impact across the supply chain.
1. Working across the supply chain to lower It also has a refill bottle of cleaning spray
the environmental impact of products. The that uses biodegradable ingredients and a
life science company Merck has developed novel safety mechanism to mix concentrated
several greener, bio-based solvents using product with water in the refill – thereby
renewable resources (e.g. waste cellulose) avoiding transport costs and emissions.33
and is also addressing the problem of plastic
waste. By redesigning its sterile filtration 2. Responding to customer demand for
system, Merck avoids using funnels, thereby materials to solve environmental problems.
reducing plastic by up to 48% and packaging BASF has developed nitrogen stabilizers for
size by up to 73%. Its redesign also reduces agriculture. The stabilizers allow plants to more
transported weight, shelf space requirements effectively use fertilizers and thus increase yield
and the amount of waste created (including potential by up to 12% while reducing ammonia
biohazardous waste).32 Similarly, Unilever losses by up to 90%. The changes help
is moving from petrochemical-based farmers reduce their emissions significantly.34
surfactants to renewable and biodegradable
Action 4: Design value chain/sourcing strategy for sustainability
Companies should also consider emissions in The company now owns and directly manages
their value-chain design choices, for example by ~243,000 hectares of forestland in the US and
rethinking their make-or-buy decisions and by Europe.35 Similarly, “nearshoring” can both reduce
limiting the need for long-range logistics. INGKA logistics emissions and improve supply-chain
Group (IKEA) invests in resources important for resilience to potential shocks – ever more relevant
the company’s long-term development – such as in a post-COVID world.
sustainable energy, wood and recycled materials.

5.3 Engage suppliers
Action 5: Integrate emissions metrics in procurement

standards and track performance
Setting procurement standards for suppliers Project Gigaton initiative does not impose
is one of the most powerful direct levers to standards; instead, it allows suppliers to
address upstream emissions. Strong standards set specific, measurable, achievable and
link practices – such as a specific share and appropriate emission reduction goals for
quality of renewable power, required levels of themselves. As of last year, suppliers had
process efficiency or a required share of recycled avoided a cumulative 230 million tonnes
materials – to procurement decisions. Two principal of CO2e.36 This approach helps ensure
approaches exist: standards are achievable but is more
complex to monitor and may be incompatible
– Impose standards: companies can define a with highly ambitious net-zero targets.
preferred set of standards and require their
suppliers to use them in tenders. This is simple Beyond defining procurement standards, supply-
and easy to monitor and ensures that standards chain emission reductions often require more
align with company priorities. On the other intensive supplier collaboration – to educate
hand, some standards may be difficult for suppliers about decarbonization levers, provide
selected suppliers to implement. For example, technical advice, enable longer-term asset
sector-specific science-based target pathways upgrades and cultivate continuous improvement.
are not yet available in some industries, so it
may be difficult for some suppliers to commit to Finally, companies should introduce sustainability
one. Generally, alignment on an industry level metrics into competitive tendering processes
can help to make implementation easier. and reward climate action among suppliers; for
example, through better payment terms. Puma
– Require suppliers to set standards: is working with BNP Paribas to offer a supplier
some companies prefer to let suppliers set financing programme that rewards social and
standards themselves. For example, Walmart’s environmental standards.37
Our suppliers have to show commitment and progress to achieve

renewable energy as part of the supply package – we have
webinars on the business case for this and it inspires action.
Dimitri de Vreeze, Co-Chief Executive Officer and Managing Board
Member, Royal DSM
BOX 3 Supply chain “pinch points”
Directly engaging suppliers is especially impactful at affect a significant portion of global emissions.
the pinch points along the supply chain, since a few Another example: The London Metal Exchange is
individual companies are able to have an outsize role. the global trading platform for metals, and would
therefore be in a position to trigger transparency
‘Scale is super-important – if you are
across the entire industry and impose climate
only 10% of a supplier’s business they will
standards across the value chain.
likely not change – you need critical mass
to get movement.’ ‘We are increasing transparency, on a voluntary
Marc Engel, Chief Supply Chain Officer, Unilever basis, of relevant supply-chain information
from mine to end product and providing
In the food value chain, for instance, four major greater access to sustainably produced metal
grain traders today account for more than 75% so the market has the ability to make trading
of global demand. If these four defined joint decisions on the basis of that information.’
standards on agricultural emission-intensity and
deforestation-free agriculture, and took joint action Matthew Chamberlain, Chief Executive Officer,
with their suppliers, they could by themselves London Metal Exchange

With help from others, we developed
an inclusive supplier engagement
programme that is designed to deliver
impact by building a broad tent – getting
everyone going on practical actions.
Kathleen McLaughlin, Executive Vice-President
and Chief Sustainability Officer, Walmart
With help from others, we developed an inclusive

supplier engagement programme that is designed
to deliver impact by building a broad tent – getting
everyone going on practical actions.
Kathleen McLaughlin, Executive Vice-President and Chief
Sustainability Officer, Walmart

Action 6: Work with suppliers to address their emissions
In many cases, reducing upstream emissions suppliers to make financial commitments,

will require working directly with suppliers on companies may need to share the risk through
joint abatement and circularity projects. Many co-investment, offtake agreements or joint
companies already engage in initiatives on supplier decarbonization initiatives. This is especially
education, technical support and methodology important in industries where decarbonization
sharing, especially in relation to efficiency requires significant investments in technology
initiatives. For example, Danone provides a training that is still immature. But it is also relevant for
programme for farmers to improve costs and decarbonization measures that are already
move to sustainable farming practices.38 Google economic. For example, Energy Efficiency Services
helps suppliers to identify value-generating energy Limited (EESL) in India – in partnership with the
efficiency opportunities and supports them to Indian government – uses a pay-as-you-save model
implement these at office sites.39 to support companies in implementing efficiency
measures, thereby removing the need for a
In cases where reducing emissions requires company to make any upfront capital investment.40
We started developing a supplier efficiency programme where

we shared our own best practices with suppliers and others.
Clay Nesler, Vice-President Global Energy and Sustainability,
Johnson Controls
EESL utilizes the approach of bulk procurement, demand

aggregation and monetization of savings, which makes
adoption of energy-efficient technology lucrative for the entire
value chain.
Rajat Sud, Managing Director, Energy Efficiency Services Limited
(EESL)
BOX 4 HYBRIT: a cross-supply-chain project for emission-free steel
In 2016, steel manufacturer SSAB, mining and producers is a crucial enabler for reducing
company LKAB and utility company Vattenfall the risk associated with initial investments.
started a joint venture to create HYBRIT. HYBRIT
The HYBRIT pilot phase has an estimated cost of
aims to replace coking coal with hydrogen
~€230 million (including a ~€60 million grant from
to enable the production of fully emission-
the Swedish government); the goal is to make
free steel. Decarbonizing steel is one of the
steel available to customers within 10 years. Its
major challenges in global climate action – a joint venture ownership structure helps reduce the
result of the industry’s high carbon and capital financial exposure of each partner and integrates
intensity, low margins and limited low-carbon each of their capabilities into the project. If all goes
technology alternatives. These are not barriers as planned, this pilot will help drive innovation
that any single player can overcome on its and bring down the cost of sustainable steel
own. As such, collaboration between suppliers production, benefitting the entire sector.41
Apple’s Supplier Clean Energy Program aims to in China and aggregating demand for clean
reach 100% clean energy in its supply chain by energy across its supplier base.42 Similarly,
2030 and has resulted in ~8GW of clean energy Maersk and H&M have jointly developed an
commitment. As part of the programme, Apple initiative that enables low-carbon shipping of
is directly investing in renewable generation H&M products through the use of biofuels.43

BOX 5 Pushing for material impact in renewable power
The number of corporate commitments to climate buying unbundled certificates of origin (CoOs) or
action and their level of ambition have increased renewable energy certificates (RECs or iRECs) that
significantly in recent years – and procuring provide additional income streams to green power
green power is a key element in all of them. As projects already in development. While CoOs and
voluntary procurement of renewables becomes RECs do not necessarily fund new projects, they
more prevalent, it is critical that companies aim for can increase the bankability of existing renewables
their purchases to make a material impact on the and lead to more being built in the future.
energy landscape. Ensuring that the renewable
energy purchased is “additional” – i.e. it would not As companies think about the standards they set
otherwise be available to the system – is the most for suppliers to use renewable power, they should
direct way to contribute to the “greening” of power bear in mind how they can ensure maximum
networks. Companies can ensure “additionality” impact. Some forward-thinking companies are
by building their own renewables on- or near- supporting suppliers to buy into PPAs, and
site, signing direct or virtual power purchase bodies such as the Renewable Energy Buyers
agreements (PPAs, vPPAs) or directly investing in Alliance (REBA) can help navigate this landscape.
new renewable projects with bundled certificates. Establishing an industry standard for the level of
material impact achieved with different renewable
Where these options to add renewable capacity purchasing methods would be a helpful way
to the grid do not exist (e.g. where the regulatory to give companies transparency on the level of
landscape does not allow for the signing of PPAs) “additionality” or impact they are achieving, and
companies can engage in policy advocacy to help to build pressure on governments that put
drive change at the system level. They can also blockers on renewables development.
send a demand signal to the energy market by
5.4 Push ecosystems
Action 7: Engage in sector initiatives for best practices,

certification, traceability, policy advocacy…
Sector initiatives are another way for ambitious for decarbonization across value chains. Common
companies to increase their impact. Similar to some policy recommendations provide a strong message
of the supply-chain actions described above, this that business wants support to decarbonize.
is especially relevant for players in sectors reliant For example, Sony recently urged the Japanese
on capital-intensive decarbonization solutions government to lower barriers to renewable energy in
that would be prohibitively expensive for a single the country and has threatened to move its factories
company. Ambitious companies should thus put abroad if the Japanese government does not act.
pressure on industry bodies and other organizations The electronics company Ricoh, the cosmetics
to establish sector-level targets for climate action. business Kao, and the fund manager Nissay are
In doing so, they can move the entire sector and supporting Sony’s push.46 The Carbon Pricing
their supply chains, and allay concerns regarding Leadership Coalition – aimed at expanding carbon
competitiveness. For example, AP Moller-Maersk pricing policy across the world – consists of various
has been publicly appealing for more climate governments and also many private-sector players
action in the shipping sector and is recognized as in sectors such as mining, energy, construction,
a leader in enabling sector-level targets.44 Maersk aviation and professional services. Advocacy is
has joined forces with several partners to set up especially important in heavy industry sectors where
an independent research and development centre governments are frequently huge buyers, such as
focusing on zero-carbon shipping.45 cement and steel. In these sectors, a mandate for
public procurement of green equivalents can really
Leading companies can also join forces in cross- move the needle.
sector policy groups to change the wider context
The International Maritime Organization has a role to play in

helping the shipping industry create transparency and close the
competitiveness gap between fossil and renewable fuels. This work
must start as a matter of urgency – time is of the essence and we
know that defining global market-based measures will take time.
Ole Graa Jakobsen, Vice-President and Head of Fleet Technology,
AP Moller-Maersk

Action 8: Scale-up “buying groups” to amplify demand-side
commitments
Demand-side commitments can also be a tool Leading companies are also joining forces
to encourage investments in decarbonization with supply-chain partners and with a broader
technologies. The World Economic Forum’s Mission ecosystem of regulators and policy-makers to
Possible Platform aims to bring together value- create markets for green solutions and sign
chain players to establish collaborative projects and offtake agreements to make green solutions
build demand for green cement, steel, chemicals more economical. For example, the Clean
and transport solutions. Scaling up corporate Skies for Tomorrow Coalition (part of the
offtake commitments to greener products can spur Mission Possible Platform) engages airlines
sector-level action.47 Taking a different approach, and companies with significant business travel
the members of the Oil and Gas Climate Initiative to bundle offtake for sustainable aviation fuels
(OGCI) jointly invest in hub projects for scaling and works with the International Air Transport
carbon capture and storage technologies as they Association (IATA) and governments in leading
have identified this as one of the major levers for countries to set mandates and develop
decarbonization in their sector.48 distribution infrastructure for such fuels.
The kind of cutting-edge thinking that is happening in the Mission

Possible Platform around economics, technologies and science
gives one comfort that things will move.
Sanjiv Paul, Vice-President Safety, Health and Sustainability, Tata Steel
BOX 6 The Mission Possible Platform and Clean Skies for Tomorrow
The World Economic Forum’s Mission Possible collective demand for carbon-neutral air travel can
Platform is a coalition of businesses and provide future offtake certainty for SAF, making
expert organizations committed to reducing fuel production investments easier to finance
emissions from heavy industry and mobility and thereby helping to scale SAF technologies
by creating and delivering technology, and reduce future costs. In parallel, the initiative
policy, and financing solutions. The platform advocates for governments and airports to
focuses on seven sector coalitions, including mandate SAF quotas to help the transition.50
Clean Skies for Tomorrow in aviation.49
Clean Skies has also been sharing knowledge
The coalition was established to address the and methodologies with members of industry
“chicken and egg” challenge, where neither consortia and encouraging direct investment in
individual producers nor consumers are willing new facilities for SAF alongside more traditional
(or able) to carry the initial cost burden of scaling fuel manufacturers. For example, the International
sustainable aviation fuels (SAF). The coalition is Airlines Group (IAG) has committed to net-zero
developing measures to stimulate demand and emissions by 2050 alongside a €325 million
drive supply, promoting customer opt-in schemes, commitment to develop sustainable fuel supply
allowing customers to offset travel emissions, chains. This includes direct investment in a flagship
and aggregating demand from large air travel facility, Altalto, in collaboration with Velocys, IAG
customers with high climate ambitions. This and Shell.51

5.5 Enable your organization
Action 9: Introduce low-carbon governance to align

internal incentives and empower your organization
Companies aiming to decarbonize their supply In procurement, companies should set up technical
chains need to change the way they operate. They teams able to engage suppliers and conduct
require more comprehensive data exchange with training on their decarbonization levers and
suppliers and need to set up an organization capable economics. Inditex has made sustainability one of
of engaging them on their carbon emissions, as well its main priorities for internal training; for example, in
as integrating emissions into procurement standards terms of opportunities for introducing circularity into
and decisions – and aligning targets and incentives product design.53
in their organization to emission reduction targets. All
of this requires governance. Finally, companies need to align internal targets,
funding allocations and incentives to their
Companies should try to link up core business decarbonization targets. They should embed
functions on decarbonization. For example, emission targets into their purchasing strategy and
automotive supplier ZF Friedrichshafen appointed ensure overall reduction targets are adequately
a cross-functional sourcing board to link carbon cascaded across units in the organization. Where
emissions to purchasing, logistics, quality and other emission reduction may result in higher spending,
functions.52 When the focus of decarbonization they need to develop mechanisms for releasing
efforts is the upstream footprint, functions such funds – for example, through internal carbon pricing
as product development, procurement, finance, mechanisms. They should align internal incentives
strategy and sustainability may be involved. to decarbonization targets; for example, by making
Companies need to organize themselves in such them a factor in variable compensation. The Carbon
a way that targets and accountabilities are fully Disclosure Project (CDP) found that around half of
aligned. They should strive to reduce the number Europe’s largest firms already link their executive
of interfaces between functions involved in climate- pay to climate change.54 Similarly, companies can
related topics, increasing automation, reducing link their procurement key performance indicators
process complexity and enhancing process (KPIs) and team compensation to supply-chain
standards wherever possible. decarbonization initiatives.
Data collection between life-cycle analysis and Scope 3 teams

is often not synchronized – they should be closely connected to
create an effective overview of the baseline.
Christoph Meinrenken, Research Scientist at the Earth Institute,
Columbia University

6 Time to move
Achieving a net-zero supply chain will have
a major impact in the fight against climate
change – companies must take action now.
Supply-chain decarbonization presents a giant cost impacts on final products. In most industries,
and as-yet untapped opportunity for international economics are not a meaningful barrier to moving
climate action. It can enable companies with to net-zero supply-chain emissions.
relatively small direct emission footprints to have a
significant impact on a global scale. It can enable Upstream decarbonization, however, is hard and
end consumers to bear the costs of decarbonizing takes time. It will require companies to change the
hard-to-abate industries and transport sectors by way they design products, how they choose and
spreading the costs throughout the value chain. It engage with suppliers – and how they govern their
can enable companies selling goods in Europe and own organizations. Leading companies are already
the US to affect the emissions of process industries addressing some of these challenges. It is time for
in Asia. It gives power to climate-conscious others to start doing so, too.
consumers. And it does all this with very limited

Appendix: Details per
supply chain
Food Split of emissions by lever
Circularity/
recycling
Within the food supply chain, less than 2% of caused by deforestation and should be addressed
Material and emissions can be reduced via circularity in plastics by moving to deforestation-free agriculture, e.g.
process packaging. Approximately 25% of emissions via projects in relevant countries that provide
efficiency can be abated through material and process the financial means to protect large forests from
efficiency levers. These include the reduction being converted into cropland and that provide
Renewable of food waste, nitrogen-optimized feeding and alternatives to logging for the local population.
power increasing the productivity of low emission- The remaining ~35% are inherent to agriculture
intensity fertilizers. Renewable energy for power and cannot be reduced any further – they need to
Renewable heat and heating can provide another ~15% emissions be addressed through reforestation, restoration
savings, mainly at the food-processing and of mangroves and peatland, soil sequestration,
New processes packaging stage. The biggest bucket (~55% of biochar production and other levers. About 5% of
total emissions) needs to be tackled via nature- emissions need to be addressed via fuel switch
Nature-based based solutions. About 20% of emissions are for more carbon-efficient transport means.
solutions
Fuel switch Construction Split of emissions by lever
CCUS
Within the construction supply chain, ~5% can processes, e.g. switching steel production to less
be abated by introducing circularity in cement, carbon-intensive processes (such as changing
aluminium or plastics from demolition waste or via from blast furnaces to using direct reduced
increasing the share of scrap in existing electric arc iron in electric arc furnaces), reduces ~10% of
furnaces. Some 20% of emissions can be tackled construction emissions. Another ~10% can be
through material and process efficiency levers such abated with fuel switches in low-carbon transport.
as cement clinker substitution, and more efficient The last ~20% of all construction emissions
transport vehicles. Renewable power and heat, need to be tackled through carbon capture,
e.g. for aluminium production or at the construction utilization and storage technologies (CCUS),
site, account for another ~35%. Introducing new mainly from the cement and steel production.
Fashion Split of emissions by lever
Less than 2% of all emissions in fashion can be mix of production countries. The remaining heat
reduced by recycling. Some ~15% can be abated consumption would need to be shifted to renewable
by putting pressure on suppliers to increase heating, saving another ~20%. Introducing new
process efficiency – with upgrades to less energy- processes, e.g. moving from wet towards dry
consuming machinery for sewing, spinning, processing technologies, can save another ~10%.
weaving and knitting. Switching production An additional ~10% of all fashion emissions – part
to renewable power sources alone abates an of those from agriculture – need to be addressed
additional ~45%, as emissions within the textile and via nature-based solutions, e.g. growing cotton
garment production process are mainly driven by more sustainably. The last 2% or so can be tackled
the high shares of fossil-derived energy (e.g. lignite, via fuel switches for low-carbon transport.
hard coal, gas and oil) within the domestic energy

FMCG Split of emissions by lever
In fast-moving consumer goods (FMCG), ~15% for plastics require both low- and high-temperature
of emissions can be avoided with circularity by heat, switching to renewable heat (e.g. heat
mechanically and chemically recycling plastics, pumps or biogas) would be needed for ~30%
thereby lowering demand for virgin feedstock. of emissions. The last ~5% each can be tackled
Another ~25% can be saved by improving process with new processes (e.g. moving to bio-based
efficiency across the supply chain. Renewable plastics), fuel switch in transport, and CCUS
power accounts for another ~15% of emissions. for remaining chemical process emissions.
As most underlying chemical production processes
Electronics Split of emissions by lever
In electronics, ~5% of supply-chain emissions can emissions can be abated through renewable
be addressed through circularity, e.g. recycling power, and ~30% through (mostly low-temperature)
plastic as input material. Larger potential comes renewable heat. Less than 2% can be abated with
from material and process efficiency improvements, new processes (e.g. bio-based plastics) and CCUS
accounting for ~20% of potential savings, especially on residual plastics emissions. About 5% will need
in manufacturing and mining. Some 35% of to be addressed through fuel switch in transport.
Automotive Split of emissions by lever
Renewable power represents the largest e.g. switching from a blast furnace to an electric
abatement lever, with ~40% mainly from within arc furnace route in steel. Another ~5% can be
the aluminium, glass and battery production addressed through fuel switch to low-carbon
processes. About 20% of automotive emissions transport, e.g. switching combustion trucks to
can be addressed with renewable heat, e.g. by battery-electric and hydrogen-powered versions.
switching to green heat for drying processes The last ~5% need to be abated via CCUS,
within battery cell manufacturing. Roughly 10% mainly in steel production through addressing
of emissions can be tackled with new processes, the remaining blast furnace emissions.
Professional services Split of emissions by lever
About 10% emission reductions are possible by renewable heat (~35%) for in-office consumption.
reducing travel and switching to virtual meetings The remaining reduction (~15%) needs to come
– a routine that has become customary in recent from net-zero business travel, e.g. by switching
months.55 The bulk of emissions can be tackled from conventional jet fuel to renewable fuels and
by procuring renewable power (~40%) and switching local transport to battery-electric cars.
Freight Split of emissions by lever
In freight, the number of straightforward levers is and improved routing. The bulk of emissions
more limited. Over a timeline of the next 10–15 have to be eliminated by switching to electric
years, only around 20% of emissions can be solutions or renewable fuels – fuel-cell and battery
reduced through low-cost efficiency levers, trucks on road, biofuels or green ammonia in
such as improved design of vessels, better shipping, as well as bio- or e-fuels in aviation.
aircraft aerodynamics, more efficient trucks

Methodology
Emissions split per supply chain: Analyses Finally, we conducted several expert workshops to
of emission splits of supply chains were based challenge and adjust all assumptions and to agree
on companies’ most recent responses to CDP. on a conservative yet optimistic view on costs. Of
Member companies voluntarily disclose on an course, there is some uncertainty in these numbers
annual basis to CDP, thus our dataset from as they reflect projections from now to 2030.
2020 represents 2019 reporting data. The data Moreover, not all cost assumptions are equally
includes both quantitative emissions disclosed certain, as we note in some graphics included in
for Scopes 1, 2 and 3 and a qualitative survey this study. For the ones that are especially critical,
in which companies respond to questions on a e.g. hydrogen or CCUS, we highlighted this with an
broad range of topics, from climate governance additional shade on top of the bars for the costs.
to target-setting and investment in abatement While figures were developed from a conservative
initiatives. For this report, we matched the provided company-level approach, if full value chains
CDP classification of companies in industry, sector decarbonize, this might lead to some additional
and activity to the eight focus supply chains. system costs. This holds true especially for the
To ensure better comparability and to disregard power system, e.g. for stranded assets replaced by
companies that did not calculate certain upstream renewable capacity and the integration cost of load
categories, we selected only those responses with balancing and renewable backup at a certain scale.
data for six or more of the eight Scope 3 upstream
categories as defined by the GHG Protocol. This End-consumer cost impact: For each cost
led to a subset of 320 companies across all supply estimate on end-consumer products, we have
chains that build the data for the initial figures. collected a bucket of different products with their
respective supply-chain emissions and average
Abatement cost curves per supply chain: The prices. The products in this bucket include a
report considers the costs per tonne of CO2e in variety of different products within the same
2030, thus capturing likely cost decreases from category, e.g. several different garments for
learning curves in leading green technologies fashion, several different electronics devices etc.
not yet readily available at scale. For example, This provides us with a range of cost increases
the cost of green hydrogen – produced through for decarbonising the category, and we take an
electrolysis powered with renewable energy – will average of those cost increases for our estimates.
likely drop by about a third by 2030. However, For this, we employed the comprehensive
assumptions for cost decreases and potentials literature review from the abatement cost curves
have been developed with a conservative and further BCG project experience. In addition,
approach. For each of the eight supply chains we were able to gain access to the Carbon
covered in this report, we have conducted a Catalogue, a product-carbon-footprint database
comprehensive literature review across academic of a research team at Columbia University’s
research papers, industry reports, market-leading Research Program on Sustainability Policy and
company publications and further studies. Management as well as CoClear.56 From these
buckets, we derived an average cost increase
We collected emission splits across supply- and applied this to the exemplary products.
chain steps and potential levers to tackle these
emissions. Further, we compared and reviewed Barriers to action and corporate guide:
the collected assumptions on reduction potentials We based the insights of this report on
and costs and complemented them with figures interviews with 25 chief executive officers
collected from various decarbonization projects and their teams around the world as well as
that Boston Consulting Group (BCG) has 14 industry and/or academic experts.
conducted with clients across different sectors.

Contributors
World Economic Forum Miranda Hadfield
Project Leader, World Economic Forum Fellow
Anthony Hobley Patrick Herhold

Executive Director, Mission Possible Platform Managing Director and Partner
Dominic Waughray Henri Humpert

Managing Director, Centre for Global Public Goods Consultant
Christine O’Brien
Boston Consulting Group Managing Director and Partner
Cornelius Pieper
Jens Burchardt Managing Director and Partner
Partner and Associate Director, Climate Impact
Daniel Weise
Michel Frédeau Managing Director and Partner
Managing Director and Senior Partner

Acknowledgements
Wolfgang Berger Rich Lesser
Vice-President Business Development, DFGE Chief Executive Officer, Boston Consulting Group
José Luis Blasco Yashovardhan Lohia
Global Sustainability Director, Acciona Chief Sustainability Officer, Indorama Ventures
Simon Boas Hoffmeyer Kathleen McLaughlin
Senior Director Sustainability, Carlsberg Group Executive Vice-President and Chief
Alexandra Brand Sustainability Officer, Walmart
Chief Sustainability Officer, Syngenta Christoph Meinrenken
Rob Cameron Research Scientist at the Earth
Global Head of Public Affairs and Institute, Columbia University
Sustainability, Nestlé
María Mendiluce
Matthew Chamberlain Chief Executive Officer, We Mean Business
Chief Executive Officer, London Metal Exchange
Clay Nesler
Elena Corrales Vice-President Global Energy and
Knowledge Expert, Boston Consulting Group Sustainability, Johnson Controls
Cynthia Cummis Eric Olson
Director, Private Sector Climate Mitigation, World Senior Vice-President, BSR
Resources Institute and Steering Committee
Member, Science Based Target Initiative Joonas Päivärinta
Lead Knowledge Analyst, Boston Consulting Group
Gyorgy Dallos
Senior Campaign Strategist, Climate and Sanjiv Paul
Energy, Greenpeace International Vice-President Safety, Health and
Sustainability, Tata Steel
Martin Daum
Member of the Board of Management, Daimler Laila Petrie
Chief Executive Officer of 2050 and
Stefan Doboczky
Joint Chair, UNFCCC Fashion Industry
Chief Executive Officer, Lenzing
Charter for Climate Action
Greg Downing
Mark Porter
Sustainability Director, Climate, Cargill
Director, Renewable Energy Buyers Alliance
Marc Engel
Chief Supply Chain Officer, Unilever Erwan Saouter
Director Climate and Energy, World Business
Tomomi Fukumoto Council for Sustainable Development
Head of Corporate Sustainability, Suntory
Hak-Cheol Shin
Dexter Galvin Chief Executive Officer, LG Chem
Global Director Corporations
and Supply Chains, CDP Mahendra Singhi
Managing Director and Chief Executive
Anirban Ghosh
Officer, Dalmia Cement
Chief Sustainability Officer, Mahindra Group
Kevin Soubly
Ole Graa Jakobsen
Project Lead, Clean Skies for Tomorrow
Vice-President and Head of Fleet
Technology, AP Moller-Maersk Rajat Sud
Managing Director, Energy Efficiency
Henrik Henriksson
President and Chief Executive Officer, Scania Services Limited (EESL)
Paul Hewett Jörg Unger

Chief Executive Officer, Belltown Power UK Senior Vice-President Corporate Technology, BASF
Oliver Hurrey Maria Verde

Founder, Galvanised, and Founder Knowledge Analyst, Boston Consulting Group
and Chair, Scope 3 Peer Group Dimitri de Vreeze
Sam Kimmins Co-Chief Executive Officer and Managing
Head of RE100, The Climate Group Board Member, Royal DSM
David Lear Andrew Winston

Vice-President Corporate Sustainability, Dell Founder, Winston Eco-Strategies

Endnotes
1. European Commission, State of the Union: Commission Raises Climate Ambition and Proposes 55% Cut in Emissions by
2030, September 2020: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1599 (link as of 8/12/20).
2. UN News, UN Chief Hails Republic of Korea’s Vow to Achieve Carbon Neutrality: https://news.un.org/en/
story/2020/10/1076342; UN Chief Encouraged by Japan’s 2050 Net Zero Pledge: https://news.un.org/en/
story/2020/10/1076132; “Enhance Solidarity” to Fight COVID-19, Chinese President Urges, Also Pledges Carbon Neutrality
by 2060: https://news.un.org/en/story/2020/09/1073052 (links as of 8/12/20).
3. Carbon Brief, If Biden Wins the US Election, More Than Three-Fifths of Global CO2 Emissions Will Be Under Net-Zero
Targets, October 2020: https://twitter.com/DrSimEvans/status/1321769016403382278 (link as of 8/12/20).
4. Data-Driven Envirolab and NewClimate Institute, Accelerating Net Zero: Exploring Cities, Regions, and Companies’ Pledges
to Decarbonise, September 2020: https://newclimate.org/2020/09/21/accelerating-net-zero-exploring-cities-regions-and-
companies-pledges-to-decarbonise/ (link as of 8/12/20).
5. Race to Zero, The Race to Zero Emissions by 2050 at the Latest, October 2020: https://racetozero.unfccc.int/what-is-
the-race-to-zero/; Science Based Targets, Companies Taking Action: https://sciencebasedtargets.org/companies-taking-
action (links as of 8/12/20).
6. Bloomberg financial data for fixed-income search on green and sustainable bond issuance as of 21 October 2020,
extrapolated to year end 2020.
7. World Economic Forum and Boston Consulting Group, The Net-Zero Challenge: Fast-Forward to Decisive Climate Action,
January 2020: https://www.weforum.org/reports/the-net-zero-challenge-fast-forward-to-decisive-climate-action
(link as of 11/12/20).
8. SME Climate Hub, 1.5°C Supply Chain Leaders: Driving Climate Action Throughout Global Supply Chains, September
2020: https://smeclimatehub.org/supply-chain-leaders/ (link as of 8/12/20).
9. Emissions, if not stated explicitly otherwise, refer to CO2 equivalents (CO2e) throughout this report. This combines the
climate impact of the seven greenhouse gases according to the Kyoto Protocol: three non-fluorinated gases – carbon
dioxide (CO2), methane (CH4) and nitrous oxide (N2O) – and four fluorinated gases.
10. World Resources Institute and World Business Council for Sustainable Development, The Greenhouse Gas Protocol –
A Corporate Accounting and Reporting Standard [revised edition], March 2004: https://ghgprotocol.org/sites/default/files/
standards/ghg-protocol-revised.pdf (link as of 8/12/20).
11. According to Nestlé’s 2020 disclosure to CDP, publicly available via: http://www.cdp.net (link as of 8/12/20).
12. Boston Consulting Group, Redrawing the Map of Global Trade, July 2020: https://www.bcg.com/publications/2020/
redrawing-the-map-of-global-trade (link as of 8/12/20).
13. Ibid.
14. This view excludes any emissions from the use of products as laid out in Figure 1. The other ~50% of global emissions
cover emissions from, e.g. light vehicles, buildings, residential heating and other industries. These are not the focus of
this report, which concentrates instead on the eight supply chains described, i.e. food, construction, fashion, FMCG,
electronics, automotive, professional services and freight.
15. According to the International Council on Clean Transportation, an average electric car today has a roughly 50% higher
upstream and production footprint than a similar-sized car with an internal combustion engine. The International Council
on Clean Transportation (ICCT), Effects of Battery Manufacturing on Electric Vehicle Life-Cycle Greenhouse Gas Emissions,
February 2018: https://theicct.org/sites/default/files/publications/EV-life-cycle-GHG_ICCT-Briefing_09022018_vF.pdf
(link as of 8/12/20).
16. The calculations with regards to the lever potentials within each supply chain are based on industry averages and can
thus be taken only as indicative for any company.
17. Centre for Climate and Energy Analyses (CAKE), The European Green Deal Impact on the GHG’s Emission Reduction
Target for 2030 and on the EUA Prices, March 2020: http://climatecake.pl/wp-content/uploads/2020/03/Impact-on-the-
reduction-target-for-2030-and-on-the-EUA-prices.-Summary.pdf (link as of 8/12/20).
18. International Renewable Energy Agency (IRENA), Renewable Power Generation Costs in 2019, June 2020:
https://www.irena.org/publications/2020/Jun/Renewable-Power-Costs-in-2019 (link as of 8/12/20).
19. Studies include Accenture Chemicals, Global Consumer Sustainability Survey, 2019: https://www.slideshare.net/
accenture/accenture-chemicals-global-consumer-sustainability-survey-2019; Toluna, 2019 Sustainability Report:
Consumers Hold Brands Responsible: http://go.toluna-group.com/l/36212/2019-10-30/5p7ppd; First Insight, The State of
Consumer Spending 2020: https://www.firstinsight.com/white-papers-posts/gen-z-shoppers-demand-sustainability
(links as of 8/12/20).
20. NYU Stern Center for Sustainable Business, Sustainable Market Share Index – Research on 2015–2020 IRI Purchasing
Data Reveals Sustainability Drives Growth, Survives the Pandemic, July 2020: https://www.stern.nyu.edu/sites/default/
files/assets/documents/NYU%20Stern%20CSB%20Sustainable%20Market%20Share%20Index%202020.pdf
(link as of 8/12/20).

21. Unilever, We Are Selling with Purpose: https://sellingwithpurpose.unilever.com/?p=252 (link as of 8/12/20).
22. According to Carlsberg’s 2020 disclosure to the Carbon Disclosure Project (CDP), publicly available via:
http://www.cdp.net (link as of 8/12/20).
23. Daimler, Blockchain Pilot Project Provides Transparency on CO2 Emissions: https://www.daimler.com/sustainability/
resources/blockchain-pilot-project-supply-chain.html (link as of 8/12/20).
24. Science Based Targets, Sector Projects: https://sciencebasedtargets.org/sectors (link as of 8/12/20).
25. Decathlon, Our Climate Commitment: http://sustainability.decathlon.com/action-areas/challenges-strategies/climate-

commitment/ (link as of 8/12/20).
26. According to Carlsberg’s 2020 disclosure to CDP, op. cit., and Carlsberg, Sustainability Report 2019, February 2020:
https://www.carlsberggroup.com/media/35965/carlsberg-as-sustainability-report-2019.pdf (link as of 8/12/20).
27. The Beverage Industry Environmental Roundtable (BIER) has developed sector guidance to enhance and support
the estimation of tracking and reporting of GHG emissions in the beverage industry: https://www.bieroundtable.com/
publication/greenhouse-gas-emissions-sector-guidance/. The EU’s Product Environment Footprint Category Rules include
beer guidance: https://ec.europa.eu/environment/eussd/smgp/pdf/Beer%20PEFCR%20June%202018%20final.pdf
(links as of 8/12/20).
28. Dell, Recycled Materials – Discarding the Idea of Waste: https://corporate.delltechnologies.com/en-us/social-impact/

advancing-sustainability/sustainable-products-and-services/materials-use/recycled-materials.htm#scroll=off
(link as of 8/12/20).
29. Electrek, Tesla Reveals Revolutionary New Wiring Architecture to Help Robots Build Upcoming Cars Like Model Y, July
2019: https://electrek.co/2019/07/22/tesla-revolutionary-wiring-architecture-robots-model-y/ (link as of 8/12/20).
30. World Economic Forum, The Circular Cars Initiative: https://www.weforum.org/projects/the-circular-cars-initiative

(link as of 8/12/20).
31. Brand Eins, Alles Wurst: https://www.brandeins.de/magazine/brand-eins-thema/reputation-2019/ruegenwalder-muehle-

ealles-wurst (link as of 8/12/20).
32. Merck Group, Merck Corporate Responsibility Report 2019, April 2020: https://www.merckgroup.com/en/cr-report/2019/
products/sustainable-products/sustainable-product-design.html (link as of 8/12/20).
33. Unilever, Safe and Sustainable By Design: https://www.unilever.com/about/innovation/safety-and-environment/safe-and-

sustainable-by-design/ (link as of 8/12/20).
34. BASF, Limus Nitrogen Stabilizer: https://www.basf.com/global/en/who-we-are/sustainability/we-drive-sustainable-

solutions/sustainable-solution-steering/examples/limus-nitrogen-stabilizer.html (link as of 8/12/20).
35. IKEA Group, IKEA Group Acquires 25,000 Acre Forest in Alabama: Latest Investment Furthers the IKEA Group Expansion in
the US, February 2018: https://www.ikea.com/us/en/this-is-ikea/newsroom/ikea-group-acquires-25-000-acre-forest-in-
alabama-latest-investment-furthers-the-ikea-group-pubcccece21 (link as of 8/12/20).
36. Walmart Sustainability Hub, Project Gigaton: https://www.walmartsustainabilityhub.com/project-gigaton (link as of 8/12/20).
37. BNP Paribas, BNP Paribas and PUMA Launch Innovative Financing Program for Suppliers to Reward Social and
Environmental Standards, September 2016: https://group.bnpparibas/en/press-release/bnp-paribas-puma-launch-
innovative-financing-program-suppliers-reward-social-environmental-standards (link as of 8/12/20).
38. Danone Écosystème, H’lib Dzair: http://ecosysteme.danone.com/projectslists/hlib-dzair/ (link as of 8/12/20).
39. Google, Building an Energy-Efficient, Low-Carbon Supply Chain: https://sustainability.google/progress/projects/supply-

chain-energy-emissions/ (link as of 8/12/20).
40. Energy Efficiency Services Limited, About Us: https://www.eeslindia.org/about_us.html (link as of 8/12/20).
41. LKAB, SSAB and Vattenfall, HYBRIT – Towards Fossil-Free Steel: https://www.hybritdevelopment.com/ (link as of 8/12/20).
42. Apple, Supplier Clean Energy – 2020 Program Update: https://www.apple.com/environment/pdf/Apple_Supplier_Clean_

Energy_Program_Update_2020.pdf (link as of 8/12/20).
43. Maersk, H&M Group Reduces Carbon Footprint with Maersk ECO Delivery, February 2020: https://www.maersk.com/
news/articles/2020/02/28/h-m-group-reduces-carbon-footprint-with-maersk-eco-delivery (link as of 8/12/20).
44. Pacific Standard, At COP24, the Shipping Giant Maersk Is Leading the Way to Zero Emissions, December 2018: https://
psmag.com/environment/at-cop24-the-shipping-giant-maersk-is-leading-the-way-to-zero-emissions (link as of 8/12/20).
45. Maersk Mc-Kinney Moller Center for Zero Carbon, About Us: https://zerocarbonshipping.com/ (link as of 8/12/20).
46. Financial Times, Sony Warns It Could Move Factories Over Japanese Energy Policy, November 2020:
https://www.ft.com/content/bbd59494-ac64-4dda-8da5-a2990d8936d3 (link as of 8/12/20).
47. World Economic Forum, Mission Possible Platform: https://www.weforum.org/mission-possible (link as of 8/12/20).
48. Oil & Gas Climate Initiative (OGCI), Removing Carbon Dioxide: https://oilandgasclimateinitiative.com/action-and-
engagement/removing-carbon-dioxide-ccus/ (link as of 8/12/20).
49. World Economic Forum, Mission Possible Platform, op. cit.

50. World Economic Forum, Clean Skies for Tomorrow Coalition: https://www.weforum.org/projects/clean-skies-for-
tomorrow-coalition (link as of 8/12/20).
51. International Airlines Group, Sustainability in Action: https://www.iairgroup.com/en/sustainability/sustainability-in-action
(link as of 8/12/20).
52. ZF Friedrichshafen, Sustainability in the Supply Chain: https://www.zf.com/mobile/en/company/sustainability/
sustainability_in_the_supply_chain/sustainability-in-the-supply-chain.html (link as of 8/12/20).
53. Inditex, Annual Report 2019: https://static.inditex.com/annual_report_2019/pdfs/en/memoria/2019-Inditex-Annual-
Report.pdf (link as of 8/12/20).
54. CDP, European Report: Higher Ambition, Higher Expectations, February 2019: https://www.cdp.net/en/articles/
companies/half-of-europes-largest-firms-now-link-executive-pay-to-climate-change (link as of 8/12/20).
55. Reducing travel and switching to virtual meetings is being referenced as material and process efficiency.
56. Meinrenken, C.J., Chen, D., Esparza, R.A., et al., Carbon Emissions Embodied in Product Value Chains and the Role
of Life Cycle Assessment in Curbing Them, Sci Rep 10, 6184, 2020: https://doi.org/10.1038/s41598-020-62030-x
(link as of 8/12/20).

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What are some of the commitments made by governments and organizations to achieve net-zero emissions?

What are some of the commitments made by governments and organizations to achieve net-zero emissions?

What are some examples of companies decarbonizing their supply chains?

What are some examples of companies decarbonizing their supply chains?

In collaboration with

Boston Consulting Group

1 A game changer for global climate action 8

2 The ‘big eight’ 11

5 Decarbonizing supply chains: a corporate guide 26

5.1 Create transparency 27

5.2 Optimize for CO2 29

5.3 Engage suppliers 30

5.4 Push ecosystems 33

5.5 Enable your organization 35

Appendix: Details per supply chain 38

© 2021 World Economic Forum. All rights

Net-Zero Challenge: The supply chain opportunity 3

A chance to ‘green the recovery’

4 Net-Zero Challenge: The supply chain opportunity

Net-Zero Challenge: The supply chain opportunity 5

6 Net-Zero Challenge: The supply chain opportunity

Scope 3 Upstream Scope 1 Scope 3 Downstream

Emissions from operations under

Emissions from usage of electricity,

Net-Zero Challenge: The supply chain opportunity 7

We can solve the climate crisis only if

8 Net-Zero Challenge: The supply chain opportunity

FIGURE 2 Emissions in supply chains often exceed operations

Raw materials End products

Reducing the company’s carbon footprint alone is not enough –

We see the progression at CDP. At the beginning we mainly

Net-Zero Challenge: The supply chain opportunity 9

Top 20 global CO2 export flows (Mt CO2, 2015)

FIGURE 4 Consumer-facing industries often have greater financial means

460 440 420

Cement Textiles Mining Chemicals Steel Agriculture

Note: Top companies selected based on number of reported Scope 3 upstream

10 Net-Zero Challenge: The supply chain opportunity

Net-Zero Challenge: The supply chain opportunity 11

Food Agriculture Freight Manufacturing

Construction Cement, steel, plastics, … Freight Manufacturing

<5% Prof. services Offices

12 Net-Zero Challenge: The supply chain opportunity

FIGURE 6 Land use and heavy industries drive most emissions

Food Construction Fashion FMCG Freight

Net-Zero Challenge: The supply chain opportunity 13

FIGURE 7 Eight levers to abate supply-chain emissions

Average costs Maturity

Less material usage and

Power from renewable sources

Heat from renewable sources

New production processes

Nature-based solutions Avoiding deforestation, €10–100/t CO2e

Transport: switch to green

Capture carbon and recycle

Ready in 5–10 years

14 Net-Zero Challenge: The supply chain opportunity

FIGURE 8 The impact of levers varies strongly across supply chains

Share of abatement lever potential by value chain (%)